Reports
- by Maria Gimeno
- 3 posts
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We’re in the midst of preparing a longer piece on best practices for token sales/ICOs and how the industry can and should move towards a greater degree of self-regulation that might help it stay ahead of a growing worldwide trend of regulatory bodies taking increased interest in ICOs.
That piece will also discuss a number of ideas about best practices and what forms that self-regulation would take. (In this regard we’re actually seeing some mildly surprising and at least partially encouraging developments, but we’ll save our commentary on those for the larger article.)
Today we just want to point out a number of interesting trends we’re seeing in the sorts of projects presenting themselves for inclusion on our Smith + Crown ICO tracker page. By virtue of maintaining this list we see virtually all of the ongoing and upcoming ICOs, and as a result have a strong grasp of different trends as they emerge and evolve.
Lately a few distinct, largely positive patterns have emerged that we wanted to highlight. We mention a few different companies in order to illustrate the trends, but do so merely to provide examples of what we’re seeing in terms of evolving practices in the ICO industry, without any implied endorsement other than to recognize their place within these patterns.
That said, much of what we’re seeing falls within a few identifiable trends:Fewer and fewer anonymous teams
While at Smith + Crown we have refused to list truly anonymous teams (there are a couple theoretical exceptions, but they are rarely even appealed to, much less invoked) but the increasingly small number of anonymous proposals that are even submitted to us is a reassuring trend.
It could be that our policies on this are well known and anonymous groups are not even bothering to submit to us, but we suspect that the numbers of such groups are also declining significantly, and we feel this represents a very positive development in the growth and evolution of the sector.
An end to the anonymous presentation of ICOs, whether seeking $10 or $10 million, might even help popular media outlets beginning to be interested in the sector to not feel compelled to include in their articles the obligatory reference to “scam-ridden world of ICOs where anonymous teams can raise XX millions with only a cobbled together white paper.”Altered vesting structures
While the earliest visions of decentralized organizations tended to assume that founders of a project should retain a small number of tokens as an expression of their desire to see the ecosystem develop and prosper free of the outsized control of a major holder, this has recently begun to change.
Likely influenced by an increasing number of management teams coming from outside the sector itself, the trend we see is of manangement retaining a somewhat larger number of tokens as an incentive aligning their interest in creating a vibrant, prosperous community or project with the interests of token holders and users.
While insiders retaining a large number of shares is obviously a fine line, the general trend appears to be moving from teams holding 6-8% of tokens in 2015-16 to closer to 20-25% today. Arguably more significant is the lengthening vesting schedules for insider token holdings.
Whereas 0-24 months was typical for vesting schedules up through 2016–during which vesting was incredibly rare at all–now vesting schedules are now stretching into the 36-48 month timeframe and are another strong measure of management commitment to a project. Some of the most prominent sales of 2016 (Golem, Waves, Lisk) had no obvious vesting schedules at all.Creative practices and procedures around the ICO are being explored
One trend is that a growing number of ICOs are fully implementing Know Your Customer (KYC) practices. Not only does this serve to avoid the frenzied rush of many earlier ICOs–environments that lent themselves to hacks, thefts, and whatever other nefarious activities within the chaos of those initial moments–but some of these ICOs have also established contribution limits in an effort to ensure a wider distribution of their tokens, and by extension, interest and participation in their project.
Yes, these can often be circumvented, but when combined with pre-registration and KYC practices, it is increasingly challenging to do so. Civic, Modum.io, Cindicator and cofound.it projects are good examples of these. ICOs are also assigning pre-vetted customers specific windows during which to purchase their tokens during assigned windows.
This further reduces the frenzy of the ICO, increasing security and helping to ensure mistakes are eliminated, if not reduced. Trends in distributing ICO contribution addresses are becoming more sophisticated, again reducing opportunities for nefarious activities while also reducing the chances that a contributor will themselves make a mistake.
It could be argued that some of these trends go against the open, distributed nature of the blockchain and return the advantage to those traditionally able to acquire access to the best early stage opportunities. However, not all projects are barring “retail investors”–rather they are barring anonymous investors.
These developments also signal a certain stage in the maturity of the sector, one in which a greater amount of money is entering the space. An element of the original spirit of the crypto world may be (partially) lost within this process, but the money flowing into the sector will allow a range of new projects to be funded, a fact which should please anyone interested in seeing decentralized projects spread more broadly.
Finally, the sheer quantity of projects appearing lately strongly suggests there will opportunities for most interested parties to acquire the tokens in projects they choose to support, particularly as many of the new opportunities that will appeal to larger blocks of capital are arguably not the same projects appealing to individuals who have long followed the crypto sector.
So far, these are emerging spaces continue to allow a place for anonymous supporters, retail investors, and accredited investors, though how large the opportunity becomes for each of these groups remains to be seen.Strong industry specific teams
Another clear indication of a maturing industry is that more and more highly experienced individuals with strong industry-specific skillsets are staffing project teams. This represents an obvious change from several years ago, when leadership teams might have been composed exclusively of developers.
The example of Robin Lee, former CFO of the World Gold Council and principal accounting officer of GLD, the exchange-listed gold ETF, entering the sector as the head of HelloGold, clearly illustrates the trend, but he is in merely one a number of highly competent, experienced individuals who could be pointed out in this regard.Sophisticated business organization and structure
Another trend that appears to be developing is that as groups of individuals bring extensive experience from a particular industry (ticketing, marketing, and payments are a few that come quickly to mind) and seek to apply blockchain technologies and the innovations they promise to a sector they know well they can bring with them an established sense of best practices that help raise the standards within decentralized companies.
While some of these entities might be criticized by some for merely applying a decentralized layer to a traditional centralized industry, such companies nevertheless represent expansions in the areas blockchain companies are focusing their energies, which most would agree is positive for the future growth of the sector.
An example of the type of practices such groups might bring could be a business plan that calls for the scheduled release of quarterly and annual filings informing investors and token holders of the status of the project, rather than just allowing smart contracts to allocate fractionalized dividends or payment holders to token holders at designated moments. (Examples include modum.io and Acuitty.)
Developments such as this will help the ICO space and the companies operating within it to increase their appeal to a larger pool of investors who will feel more comfortable with their ability to understand, analyze, and evaluate the companies operating within it.
Of particular interest, and we’ll discuss this more next week, is that these trends also represent many of the innovations that will likely help the sector establish a more respected place with the world of global securities regulators.
Discover more reports like this on Smith + Crown here: https://www.smithandcrown.com/trends-token-sale-proposals/- By Admin
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Recommended: Central Banks Love Blockchain And What That Means For Investors And... (seekingalpha.com)
Summary
The empirical truth is that Central Banks love blockchain.Governments are uncertain about Bitcoin as a currency, but Central Banks have made it clear that blockchain technology is a huge opportunity.Several Bitcoin and blockchain investment opportunities are provided with this backdrop, with due respect to investor risk/reward tolerance.
I've already explained why Bitcoin cannot go to zero. Now investors need to understand that even if Bitcoin is pushed to the side, blockchain isn't going away because Central Banks love it. Therefore, you will want to consider your bets in Bitcoin and blockchain. Mitigate the risks, maximize the return.Does The Government Accept Bitcoin?
I've received a lot of feedback in public and private about my articles on cryptocurrencies. In one recent article, Bitcoin Vs. PayPal (NASDAQ:PYPL), one reader expressed what many people have been thinking:...my gut feeling is that it is a candidate to be one of the biggest financial asset/value destrction [sic] at some time in the future, I imagine that Global reserve currecny [sic] Central banks will not allow their most valuable power to be taken away by digital tech nerds, so they can easly [sic] out law it once they see the threat getting big enough or it becomes de facto currecy [sic] of crime cartels...
In short, the idea is that the government will never allow Bitcoin to survive. It will crush Bitcoin before it gets too big. It hates Bitcoin.Indeed, as Fortune tells us:Big governments cannot tolerate Bitcoin, the digital currency that threatens to break their monopoly on printing money, and to manipulate the economy to accommodate the interests of powerful elites.
At the same time, we know there is activity on top of Bitcoin, in the form of Grayscale Bitcoin Investment Trust (OTCQX:GBTC) and the Winklevoss Bitcoin Trust ETF (COIN). Bitcoin hasn't been crushed like a cockroach under the boot.But there are cracks. For example, with GBTC:Both the Bitcoin Investment Trust and the Ethereum Classic Investment Trust are private investment vehicles, not registered with any regulatory agency of any jurisdiction, and are NOT subject to the same regulatory requirements as SEC-registered exchange traded funds or mutual funds [emphasis added], including the requirement to provide certain periodic and standardized pricing and valuation information to investors.
AndThe BIT’s shares are publicly quoted on OTCQX® market under the OTC Market’s Alternative Reporting Standards, which do not require the same level of public disclosure as the Securities Exchange Act of 1934[emphasis added] standards applicable to SEC-registered investment vehicles.
Therefore, we know that we can get GBTC into an IRA, and get "skin in the game" with Bitcoin quite easily. But it's not like there is an extra layer of safety from the government for investors.The government is neither for nor against GBTC, and investors might feel safe because GBTC is so easily bought and sold via brokers, and put in IRAs for example.
There are mixed messages.Keep in mind there is an extra price to pay with GBTC. I've previously explained that Grayscale Bitcoin Investment Trust has indicated that the normal premium over investing directly in Bitcoin is 42%. Well, let's do the math today:
For every share of GBTC, you get 0.09258535 Bitcoin.One share of GBTC today would cost you $719The market value of 0.09258535 Bitcoin is $392.56 todayTherefore, the premium is about 83% above the underlying Bitcoin
To summarize, the government is mostly in a holding pattern on Bitcoin. Obviously, Bitcoin hasn't been killed by the U.S. government. But it hasn't approved and endorsed it either.Now, let's shift gears. What if the government cracks down on Bitcoin? I will prove that even if the government crushes Bitcoin, you can still do well because of blockchain.Bitcoin In Government and Central Banks
We return to the idea that Bitcoin could die through government and politics. But we know that the technology powering Bitcoin is blockchain, and the genie is out of the bottle. More important? Central banks love it.The central bankers do not want their institutions to own or use Bitcoin itself. Instead, they hope they can use the decentralized method of record-keeping introduced by Bitcoin [emphasis added] - known as the blockchain or distributed ledger - to complete and record transactions in the real economy more efficiently, quickly and transparently.
Plus this tidbit:If the central banks succeed, it would be one of the greatest unexpected twists in new technology: An invention aimed at dethroning central banks and making it harder for money to be tracked instead ends up empowering those central banks and making money more easily traceable.
Indeed, the Bank of England has even said blockchain could......permanently raise GDP by as much as 3% [emphasis added], due to reductions in real interest rates, distortionary taxes, and monetary transaction costs.
The truth is that Central Banks love blockchain and they are aggressively investigating it. Of course that doesn't mean they love and embrace Bitcoin.Then again, beyond the U.S., some governments are directly embracing Bitcoin not just blockchain:- Japan accepts Bitcoin as legal form of payment
- South Korea: Bitcoin can coexist with fiat currencies
- Australia will treat Bitcoin just like money
So, pressure is mounting in this space from multiple angles. There's great uncertainty about Bitcoin but clarity on blockchain. Again, we're going to have to look at options for investing, and moderating your risks.Digital currencies and blockchain are here to stay. Some governments around the world are directly embracing Bitcoin. They are embracing cryptocurrencies and certainly the technology that powers the infrastructure.The Central Banks' Safety Net
Make no mistake about any of this. Central Banks are on top of this right now. Indeed, according to the IMF, 15% of big banks will be using blockchain by the end of this year.
Furthermore, Dong He, who has lead research into digital currencies at the IMF, believes that the switch to digital currencies, by central banks could happen in the next five to ten years But this depends on the speed at which the banking system moves to using the blockchain for financial transactions.
The biggest reason is that Central Banks cannot leave blockchain to chance. They need to maintain control. So, while Bitcoin is a nuisance right now, blockchain is a new set of handcuffs and they want the keys. The tracking and accountability using blockchain is happening today.Play the Bitcoin and Blockchain Investment Game?
With the "Central Banks Safety Net" in your mind, what are your options for investing in Bitcoin and blockchain? It's important to get a bit creative here.First, you can simply invest directly in Bitcoin (e.g., using Coinbase). That gives you direct access but the highest risk.Second, you can invest in Grayscale Bitcoin Investment Trust.
The NAV tracks the Bitcoin market price, less fees and expenses. You'll pay a 2% annual fee for that privilege. There are reasons why GBTC is superior to directly holding Bitcoin, so wrap your head around that. This is also a very high risk, noting especially the premium to NAV mentioned above.Third, you can invest in Bitcoin mining via a company like MGT Capital Investments (OTCPK:MGTI).
There's a bit less risk because MGTI isn't "all in" on Bitcoin. It's also into cybersecurity and privacy hardware.Fourth, you can also invest in the hardware that powers Bitcoin mining, such as Nvidia (NVDA) and Advanced Micro Devices (AMD).
Obviously, NVDA and AMD are not "all in" on Bitcoin but instead have diverse product portfolios.Fifth, you can invest in companies that provide Bitcoin services like Bitcoin Services, Inc. (OTCPK:BTSC).
They mine Bitcoins but also offer escrow services, for example. If Bitcoin gets killed, BTSC is highly exposed.Sixth, you can invest in companies that focus on Bitcoin technologies like IBM(IBM). If you go big, like IBM, your risks are dramatically smaller because of moderate Bitcoin exposure. I've talked about this in several ways. Here are two recent examples of IBM's blockchain exposure:
It's likely that other companies will enjoy the benefits of Bitcoin acceptance. For example, a natural extension would be e-commerce players, but that starts to stretch the investment thesis.If you're worried about a crash in Bitcoin, the highest risks are obviously going to be direct Bitcoin investment, GBTC, MGTI, and probably BTSC.
The lower risks are likely going to be NVDA, AMD and IBM. Obviously this risk spread is all about size and focus, and not having all your eggs in one basket.If you're concerned about investing in Bitcoin but you still want to ride the technology shift, including Central Bank support, there's a simple approach.
Moderate your bets by investing in companies like IBM that are embracing blockchain and happen to have deep roots in the financial sector. Similarly, NVDA and AMD are reasonable candidates for further due diligence:...according to MIT Technology Review editor David Rotman, Nvidia’s explosive growth in the AI and Blockchain markets gave the firm an edge over other companies.Source
AndSemiconductor firm Advanced Micro Devices has recently launched a beta version of its new Radeon Software Crimson ReLive Edition Beta for Blockchain Compute graphics card driver.Based on the release notes from the company, the driver will boost performance for “Blockchain Compute Workloads,” thus bolstering the efficiency of digital currency mining computers that use a graphics processing unit (GPU) for mining. Source
In short, you can play the Bitcoin and cryptocurrency game and moderate your bets by looking at Central Banks for insight and support. While it's unclear where Bitcoin will head in the future, it's extremely likely blockchain will survive and even thrive. That's a conservative approach versus...continue reading: https://seekingalpha.com/article/4105691-central-banks-love-blockchain-means-investors-bitcoin-specu...-
Francisco Gimeno - BC Analyst Interesting advice on bit coin investment. Always spread your risks. That always work. Interesting some tidbits of the article like that by the end of this year 15 big banks will be already using some kind of blockchain technology, and that central banks love Blockchain (not so much crypto currencies) as a wonderful tool for the improvement of the economy of each country.
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The World's First Research Center on the Social Science of Blockchain Opens... (cryptocoinsnews.com)The Royal Melbourne Institute of Technology (RMIT) has established the RMIT Blockchain Innovation Hub to explore the social science of blockchain technology.
In an announcement today, RMIT unveiled details of the research center focused on blockchain technology, an innovation that the university believes will become “a core infrastructure for the global economy.”
The hub is being proclaimed as the world’s first research center aimed at exploring the social science of blockchain technology.The research center will be led by Professor Jason Potts from RMIT’s School of Economics, Finance, and Marketing. Professor Ian Palmer, pro-vice chancellor business and vice-president at the university stated:The RMIT Blockchain Innovation Hub is the only full-service, research, learning and industry-linked blockchain body in the world.
Blockchain, the underlying tech that powers cryptocurrencies like bitcoin, will ‘revolutionize businesses as we know it in the coming years” with smart contracts and instant payments globally, the university added.
The new hub will establish a global interdisciplinary research team looking into the economic, cultural and societal implications of blockchain technology. Notably, it will also partner with companies in multiple industries to share research to ensure that students are work-ready upon graduation.
The hub will also develop and implement policies to facilitate the future blockchain economy and will also engage with policymakers and government to discuss and debate the social and policy impact of the decentralized technology.
The new blockchain-specific research hub opens within months of the University of Sydney (USYD) developing its ‘Red Belly Blockchain’ with the striking claim of processing 400,000 transactions per second, over 7x that of the world’s biggest payments network – Visa.Blockchain Hub
Australia is quickly becoming a hotbed for financial technologies (FinTech) with markedly rampant development in blockchain tech in both private and public sectors as well as a number of industries.
The Australian Securities Exchange (ASX), the country’s biggest stock exchange, is among the world’s first securities markets operators to embrace blockchain technology in a move that could completely replace its existing post-trade process. The ASX is currently completing a trial of a blockchain developed by New York-based Digital Asset.
Earlier this year, the Commonwealth Bank of Australia (CBA), one of the country’s biggest banks, announced the issuance of a blockchain-powered ‘cryptobond’ for the Queensland Treasury Corporation, touted as the world’s first blockchain bond issuance by a government entity.
In August, two pro-bitcoin Australian senators who called on the central bank to legalize cryptocurrencies established...continue reading: https://www.cryptocoinsnews.com/aussie-university-establishes-worlds-first-research-center-social-sc...- By Admin
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